Confidentiality Provisions
Most freelance contracts include strict confidentiality provisions similar to what you might find in a non-disclosure agreement. These confidentiality provisions should define what information is confidential, how confidential information is used and safeguarded, how long confidential information should be kept confidential, and any exceptions for disclosing confidential information. Confidential information often has significant value to the client and any unauthorized disclosures can lead to drastic business and legal problems. So make sure you work with your client and an attorney to understand the procedures for complying with any confidentiality provisions.
Restrictive Covenants
Restrictive covenants restrict or limit how you engage with your client and other businesses during the term of your agreement and post termination. Common examples of restrictive covenants in freelance contracts include non-competition clauses, non-solicitation clauses, and non-disparagement clauses. Non-competition clauses restrict your ability to compete with your client’s business or engage your client’s competitors. Non-solicitation clauses restrict your ability to solicit your client’s customers and business affiliates or recruit their personnel. Non-disparagement clauses restrict what you can and cannot say about your client to third parties. Most courts only enforce these provisions if they are reasonable in scope and duration and protect a legitimate business interest of the client. Because restrictive covenants may significantly impact how you operate your freelance business, you should always negotiate them to ensure fairness for everyone.
Indemnification
Indemnification limits legal liability for one or both parties to an agreement and requires compensation for any losses or damages incurred by the indemnified party. Because freelancers are generally independent contractors and control how they perform their services, clients use indemnification clauses to protect themselves from unknown liabilities that may result from the freelancer’s work. Examples of potential liabilities could be intellectual property infringement or breaching third party agreements. As a freelancer, you might argue that you should also receive the same protections from the client. To accomplish this, you could try to negotiate for mutual indemnification where each party limits the liability and compensates the other party for any losses or damages resulting from the contract.
Communication Expectations
Last, but not least, it is critical to set expectations as to how you will communicate with the client during the project. Many problems in freelance engagements stem from communication issues. It is important to be very direct about the appropriate manner of communication (whether verbal or in writing), anticipated response times, the need for mutual transparency, and maintaining a respectful tone. Effective communication is critical for forming lasting business relationships, so make it a priority with the client before beginning the project.
*Lori Ioannou, “A snapshot of the $1.2 trillion freelance economy in the U.S. in the age of Covid-19”, CNBC Small Business Playbook (September 2020). See original article here.
